Wednesday, April 3, 2019

Judge Leeson of Eastern Federal District Court Gives Lessons on Bad Faith Pleadings

In the case of Krantz v. Peerless Insurance Company, No. 18-CV-3450, 2019 WL 1123750 (E.D. Pa. March 11, 2019 Leeson, Jr., J.), the court granted a Motion to Dismiss a bad faith claim in a UIM case and then remanded the matter back to state court.

In this case, the UIM Plaintiff argued that the insurer improperly interpreted the policy in refusing to pay full policy limits.   The Complaint alleged that the carrier relied upon an invalid and unlawful set-off provision in withholding a substantial amount of the policy limits.  

However, the court found that the Plaintiff failed to plead facts to show that this set-off provision was invalid, “or, more importantly, that [the carrier] knew or should have known that it was denying the full amount of benefits based on an invalid provision.”  

The court also found additional allegations in the Complaint to be conclusory and lacking in other supporting factual allegations to make the averments plausible under the pleading requirements in federal court.   For example, the court faulted the following allegations:

(1)        The insurer did not make any good faith offers to settle despite repeated demands;
(2)        The insurer “failed to objectively and fairly evaluate his claim”;
(3)        The insurer “failed to promptly tender payment of the fair value of the claim”; and,
(4)        The insurer failed to reasonable investigate the claim.

The court concluded that the Plaintiff’s cursory allegations generally asserted that the carrier lacked the reasonable basis for denying the Plaintiff’s claim for benefits, “but do not provide any factual allegations from which the Court could make a plausible inference that Defendant knew or recklessly disregarded its lack of a reasonable basis for denying benefits.”  

After dismissing the bad faith count, the court found the Plaintiff’s claims no longer exceeded $75,000.00 and, as such, the court remanded the case to the Lancaster County Court of Common Pleas.  

Anyone wishing to review a copy of this case may click this LINK.

I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman, Krekstein & Harris.   This case was found on Attorney Applebaum excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law blog.  

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